Framework library · Growth strategy
Blue Ocean Strategy
Blue Ocean Strategy starts with a strategy canvas: the factors an industry competes on, scored for each offer and drawn as lines. When the lines run together, everyone is competing on the same things. Four actions (eliminate, reduce, raise and create) are then used to draw a different line that costs less to supply and gives more to buyers the industry has served badly.
Use it when
- Offers in your market look alike and compete mainly on price.
- A group of buyers is served badly by every current offer, such as renters who move often or small firms with no IT staff.
- You are designing a new offer and want to decide what to leave out, not only what to add.
- You need to show a board on one chart how a proposed offer differs from its rivals.
Avoid it when
- The factors the market competes on are right and you are simply behind on them. Fix execution, using competitive benchmarking to see where.
- You do not yet know what buyers care about. Interview buyers and non-buyers first, or use jobs to be done.
- Regulation fixes most of the offer, as with some universal service obligations, leaving little to eliminate or reduce.
How to run it
List the factors the industry competes on
Six to ten things buyers are offered and compare: price, headline speed, contract length, installation, equipment, support, bundled content.
Score the current offers
Score each main offer from 0 (none) to 10 (the most) on each factor. For price, score the level of price. The lines on the chart are the strategy canvas.
Talk to non-customers
Ask people who do not buy, or buy reluctantly, what puts them off. They show which factors matter less than the industry assumes.
Apply the four actions
Eliminate factors the industry takes for granted that buyers do not value; reduce those offered well beyond what buyers need; raise those offered too little; create ones never offered.
Draw the new line and check it
Add your proposed offer as a column. A good line has focus (few factors high), departs clearly from the others, and can be summed up in one sentence.
Test the cost and the price
Eliminating and reducing should take cost out. Check that the new offer is cheaper to supply as well as more valued, then test the price with real buyers.
Work through it
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Mistakes to avoid
- Only raising and creating. Without eliminating and reducing, the new offer costs more and is a differentiation strategy, not a new market space.
- Choosing factors from the company's view ("network technology") rather than the buyer's ("works the day I move in").
- Scoring rivals from their advertising rather than from what they deliver.
- Assuming the new space stays empty. Rivals copy, and the gap lasts only as long as the new line is hard to imitate.
Where it comes from
W. Chan Kim and Renée Mauborgne, "Blue Ocean Strategy", Harvard Business Review, October 2004, and the book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Harvard Business School Press, 2005), which set out the strategy canvas and the four actions framework. Source.
Blue Ocean Strategy is a registered trademark of W. Chan Kim and Renée Mauborgne. This page describes the framework independently and is not endorsed by them.
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